Novartis sees faster drugs sales growth

Novartis sees faster drugs sales growth
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First Published: Thu, Jul 16 2009. 01 16 PM IST
Updated: Thu, Jul 16 2009. 01 16 PM IST
Zurich: Swiss drugmaker Novartis AG raised its full-year forecast for drug sales on Thursday, betting on income from cancer and heart medicines after second-quarter net profit met expectations.
Novartis, which faces loss of exclusivity on its top-selling blood pressure drug Diovan in 2012, now sees sales at its drugs unit growing at a high single-digit rate or better. It had previously forecast growth at a mid-to-high single digit rate.
Novartis confirmed previous group guidance.
“A pleasant surprise in pharmaceuticals, where growth and profitability has been better than expected,” said Helvea analyst Karl-Heinz Koch. “I think the share price will react positively to this announcement.”
The pharmaceuticals sector initially coped better than many others with recession but has recently begun to underperform, hit by prospects of more competition, problems getting new drugs to market and cheaper medicines from generics manufacturers.
Novartis shares have slipped nearly 20% so far this year, underperforming both the DJ Stoxx European pharma index and the Swiss blue chip index.
They were indicated to open 0.8% higher, according to pre-market data from bank Clariden Leu.
The Basel-based group now trades at about 9 times forecast 2010 earnings, a premium to some of Europe’s other big drugmakers like AstraZeneca Plc and Sanofi-Aventis SA but a discount to local rival Roche Holding AG, which has less exposure to generic competition.
URRENCY LOSSES
Novartis’ second-quarter net profit fell 10% to $2.0 billion due to the stronger dollar and higher financing costs and the group repeated an earlier warning that currency-related losses could hit full year profit.
Because Novartis reports in dollars it has suffered from the weakness of the Swiss franc against the greenback compared with the same period last year. Profit was also hit by higher financing costs after the group issued a €1.5 billion ($2.1 billion) bond in the second quarter. Group sales fell 2% -- but rose 8% in local currencies -- to $10.5 billion, helped by new products like cancer medicine Afinitor and blood pressure drugs Exforge and Tekturna.
Drug sales rose 3% but the recession hit performance at its consumer health unit, and the Sandoz generics business was hurt by lower US prices and lost sales from a plant which US regulators will inspect in the third quarter.
Novartis had been expected to post a net profit of $2.0 billion and sales of $10.3 billion, according to a Reuters poll.
It is also aiming to produce and commercialise a vaccine against the H1N1 flu virus and expects clinical trials to begin in July.
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First Published: Thu, Jul 16 2009. 01 16 PM IST
More Topics: Novartis | Pharma | Cancer drug | Sales | Recession |